For much of its early colonial history, when it is known as the Banda Oriental ('east bank' of the Uruguay river), the region of Uruguay functions mainly as an unsettled buffer zone between hostile neighbours - the Portuguese to the north in Brazil, the Spanish to the west and south in Argentina.

The reason is the nature of the environment. The flat plains, covered in tall prairie grass, are home to herds of wild cattle and to the fierce nomadic Indians, the Charruá, who hunt them. The region is visited by European horsemen for brief raids on the cattle. But there is no mineral wealth to attract prospectors, and the landscape is not one to encourage colonists to settle and farm.

Nevertheless it is important to keep the other side out. The Portuguese make the first move, sending colonists from Brazil in 1680 to establish Colonia Sacramento on the north shore of the Plate estuary immediately opposite Buenos Aires.

It is a measures of the relative unimportance of Buenos Aires at the time that several decades pass before the Spanish respond. But in 1726 the governor of Buenos Aires establishes a settlement at Montevideo, also on the north shore of the estuary but further towards the ocean. The garrison here is well placed to intercept Portuguese ships heading for Colonia Sacramento.

The founding of Montevideo signals a more aggressive Spanish presence in the region. The trend continues when Buenos Aires becomes, in 1776, the capital of the new viceroyalty of La Plata - a territory specifically including Uruguay. By now the famous Spanish cowboys, or gauchos, are making a living by herding cattle on the pampas of Uruguay, as they also are in Argentina and Paraguay.

When Argentina and Paraguay assert their independence from Spain, it is a gaucho who takes the lead in Uruguay. In 1810 José Gervasio Artigas lays siege to the Spanish royalist forces holding Montevideo.

On this occasion royalty closes ranks against republicans. The Spanish authorities appeal to Brazil for help. In a rare example of Spanish-Portuguese alliance, royalist forces drive Artigas from Montevideo and out of Uruguay. He withdraws to Argentina with about 16,000 people, approximately a quarter of the entire Uruguayan population.

Artigas fights on, for much of the time with considerable success, until he abandons the struggle in 1820 (but not before establishing himself firmly as Uruguay's national hero). The cause is taken up in equally romantic fashion in 1825 by Juan Antonio Lavalleja with his band of Treinta y Tres (also known as the Thirty-three Immortals).

Lavalleja succeeds because he manages to revive the natural Spanish-Portuguese rivalry over Uruguay (the combatants are now independent Argentinians and Brazilians, rather than Spanish and Portuguese royalists). Lavalleja's efforts provoke a war of which the culminating point is the defeat of a Brazilian army at Ituzaingó in 1827.

It has by now become clear that neither Brazil nor Argentina can annexe an Uruguay determined on self-rule. In the long run it even suits the two rivals, and the international community, to have a no man's land between such powerful nations. So even in its independence, agreed in an 1828 treaty between Brazil and Argentina, Uruguay plays the role of buffer zone.

Rivera and Oribe: 1828-1851

The early years of Uruguayan independence are marred by bitter rivalry between two members of the heroic Trenta y Treis who have won the nation's liberty. Fructuoso Rivera becomes the first president in 1830. Manuel Oribe succeeds him peacefully in the office in 1835, but from 1838 they quarrel. Rivera deposes Oribe and takes his place.

By this time their supporters are grouped in the two parties which become part of the fabric of Uruguayan life. Rivera leads the Colorados (Reds). Oribe's followers are the Blancos (Whites). The disagreement between them (based purely on factions rather than rival policies) escalates rapidly after 1838 into civil war.

In 1843 Oribe besieges Rivera in Montevideo. He is assisted in the campaign by Argentina, always eager to interfere in Uruguayan affairs - though this adventure brings nothing but harm to Rosas, the Argentinian dictator.

The siege drags on for nine years, doing little damage to Montevideo (for a while Garibaldi, in exile after the fall of the Roman republic, is among the defenders). By the time the city is relieved, in 1851, Rivera has escaped to safety in Brazil. Oribe is soon defeated in battle and goes into exile. The quarrel of the two founding fathers is over. But their nation has been ravaged by the years of war.

Batlle and the Battlistas 1903-1966

Uruguay, during the half century after the siege of Montevideo, falls into a familiar pattern of Latin American republics. Successive generals seize power. Some are extremely repressive, some are corrupt, some are successful in improving the economy.

Civilian government is safely restored by the end of the century, enabling the Colorados and the Blancos to continue their feud through the ballot box. In the election of 1903 the Colorado party produces a president, José Batlle y Ordonez, who is the most remarkable man in Uruguayan history.

Battle is a journalist and newspaper proprietor, founder in 1886 of Uruguay's leading newspaper El Dia. He uses his newspaper to campaign against the military dictatorship and to undertake crusades for specific reforms - particularly in areas such as labour legislation (he eventually succeeds in establishing a standard eight-hour day, where workers had previously been expected to put in double that time).

Battle's election to the presidency for the Colorados in 1903 is followed by a Blanco revolt and more than a year of violence. When peace is re-established, Battle undertakes a programme of reform which is extraordinary for the time.

In his first presidential term (1903-7) Battle extends popular education, abolishes income tax for many of the lowest paid and extends the nation's programme of popular education. In his second term (1911-15), after four years of travel in Europe, he goes considerably further. Banking and insurance is nationalized, a minimum wage is introduced together with old-age pensions, paid holidays and accident insurance for workers.

One of Battle's main political concerns is to secure Uruguay against the rule of caudíllos, the plague of Latin America. His solution is to replace the role of president with that of an executive council.

In 1917, after his second and final term of office (but while he is still the dominant figure in Uruguayan politics), a version of Battle's visionary scheme is adopted. There is still to be a president, with direct responsibility for the police, army and foreign affairs, but all other aspects of national life are placed under the control of a council of nine - six members from the majority party and three from the minority.

Battle dies in 1929, just as the world recession begins. The economic troubles of the 1930s enable Gabriel Terra, president in 1933, to take the powers of a dictator. But in 1942 the Battle constitution of 1917 is restored.

The Battlistas, as the reformer's followers are known, are now in effect a separate party within the Colorados. By 1951 they are strong enough to achieve the full constitutional reform which their founder envisaged. They abolish the office of president. The nine-man council becomes the nation's collective ruler.

At the moment of this utopian experiment the Uruguayan economy is booming. The citizens of the republic enjoy the highest per capita income in Latin America. But wool is by now the most important Uruguayan export and during the 1950s the world price slumps. With the council unwilling or unable to take unpalatable decisions, the economy spirals downwards.

Elections in 1958 bring the Blancos to power for the first time in nearly a century. Finding the council system unworkable, they revert in 1966 to presidential rule. But now there is a new crisis to add to Uruguay's problems.

Urban guerrillas, the Tupamaros (taking their name from the Inca leader Tupac Amaru), are successfully destabilizing the everyday life of the nation. To cope with this threat, the Blancos enlist the services of the army. But the generals go beyond their brief. In a steadily deteriorating situation they stage a coup, in 1973, seizing power from the elected politicians.

Eleven years of terror: 1973-1984

The takeover by the military in 1973 is a profound shock in Uruguay, proud of one of the best democratic records in Latin America (Costa Rica would perhaps be its closest rival). To make matters worse the generals impose a reign of terror as severe as any in the subcontinent.

Torture and unexplained disappearances become, as in several other Latin American republics, the hushed currency of everyday life. It has been calculated that at this period Uruguay has the highest number of political prisoners for the size of its population of any country in the world. Yet eventually Uruguay's democratic tradition provides a crucial turning point.

In 1980 the generals attempt to legitimize their position through a plebiscite authorizing a revised constitution. With a censored press and little chance for opposing views to be heard, the result is expected to be a foregone conclusion. But the public votes no. Even though the result makes no immediate difference, the credentials of the repressive regime are severely damaged.

During the next two or three years the Uruguayan economy deteriorates rapidly once again (in the early days of military rule, in the 1970s, it has made a recovery). With reluctance the generals see a return to civilian rule as the only option. Elections are arranged for November 1984.

Democracy restored: from1985

The presidential election of 1984 is won by the Colorado Battlista candidate, Julio María Sanguinetti. His accession to power is at this stage still on the sufferance of the generals, and he achieves a return to full democracy only by granting the military a general amnesty for the human rights abuses of the past eleven years.

This measure, though no doubt necessary in the circumstances, lacks wide support in the electorate. In the immediate aftermath of the years of horror the popular clamour is for criminal trials and retribution. However by 1989 the mood has calmed. A referendum on the issue gives support to the amnesty.

In the first entirely free elections since the military dictatorship, held in 1989, the Blanco party makes one of its rare returns to power. But in 1994 the Colorados are back, at least in the presidency, when Sanguinetti wins a second term. The margin is extremely narrow in what is now a three-party split (Colorados 32.2%, Blancos 31.4%, and the left-wing Progressive Encounter party 30.8%). The result is a coalition government - and clear evidence of Uruguay's return to its traditional democracy.

The Uruguayan economy continues in a shaky state in the 1990s, during which the most significant event is the launch of Mercosur in 1995.